Final Results
STM Group PLC
04 March 2008
Press Release 4 March 2008
STM Group Plc
('STM', 'the Company' or 'the Group')
Preliminary Results for the 11 months ended 31 December 2007
STM Group Plc (AIM:STM), the cross border financial services provider, announces
its preliminary results for the 11 months ended 31 December 2007.
Highlights
• Raised £7.5 million through IPO in March 2007
• Successfully acquired and integrated:
o Fidecs Group Limited
o Atlas Group Limited
o Parliament Corporate Services Limited
o Compagnie Fiduciaire Trustees Limited
• Revenue of £5.29 million*
• Profit before tax of £1.78 million*
• EPS at 5.29 pence*
* Figures are not for the full year, rather from 1 February 2007 to 31 December
2007 (although they relate to just a nine month trading period post the
acquisition of Fidecs on 28 March 2007).
Commenting on the results, Tim Revill, Chief Executive Officer, said: '2007 has
been an exceptional year for STM, with the Group achieving its goals of growing
through strategic acquisitions and organic growth. The Group enters 2008 with a
pro-forma annual turnover of approximately £7.5 million, before any further
organic growth or acquisitions, and therefore looks forward to the coming year
with confidence.'
For further information, please contact:
STM Group Plc
Tim Revill, Chief Executive Officer Tel: 00 350 51610
tim.revill@stmgroupplc.im www.stmgroupplc.com
Daniel Stewart & Company Plc
Lindsay Mair / Stewart Dick Tel: +44 (0) 20 7776 6550
www.danielstewart.co.uk
Media enquiries:
Abchurch
Henry Harrison-Topham / Charlie Jack Tel: +44 (0) 20 7398 7706
henry.ht@abchurch-group.com www.abchurch-group.com
Chairman's Statement
Overview
I am delighted to present STM Group plc's ('STM', 'the Company', or 'the Group')
maiden preliminary results for the period from 1 February 2007 to 31 December
2007. These results reflect the transition from a private company to an AIM
traded public company, and encompass the Company's move from a dormant status to
that of a trading group. STM was created specifically to build a leading
financial services group operating in the international corporate and trustee
services provider ('CTSP') sector.
STM's strategy is to build an international group of CTSPs operating from a
number of complementary tax efficient jurisdictions, with each offering its
clients high quality products and services. Potential acquisition targets are
subject to extensive due diligence, with a focus on the quality of the client
portfolio, client service and compliance, and each acquisition will be required
to adhere to STM group-wide standards following acquisition.
The Group was admitted to trading on AIM on 28 March 2007, raising £7.5 million
through the issue of 15.0 million new shares to institutional and other
investors at 50 pence per share, and on the same day completed the acquisition
of the entire issued share capital of Fidecs Group Limited (renamed 'STM
Fidecs'). STM Fidecs, one of the largest CTSPs based in Gibraltar, was the
Company's principal trading subsidiary during the period under review. During
the remainder of 2007, STM Fidecs acquired three further CTSPs, two of which
operate in Gibraltar and one in Jersey.
Accordingly, STM's consolidated results for the eleven month period to 31
December 2007 include trading activities for the period from 28 March 2007 to 31
December 2007 only. However for the benefit of shareholders and for the ease of
comparative purposes, we have also included some additional pro-forma financial
information on STM Fidecs for the full year to 31 December 2007.
The 'buy and build' strategy, as set out in our AIM Admission Document,
continues to progress well and would not be possible without the continued
support of our shareholders. Our established formula for such purchases has
proven to be efficient, effective and earnings enhancing, and confirms our
assertion that the CTSP sector is ripe for consolidation. Furthermore, I'm
particularly pleased to announce that the organic growth shown by all the
acquired business has exceeded our expectations and bodes well for the future.
STM is a people and relationship business and its strength is in the quality of
its management and staff. 2007 has been a year of significant change for most
of the people within STM and, on behalf of the whole board, I would like to
express thanks for their continued dedication, professionalism and hard work
over the last year.
Bernard Gallagher
Non-Executive Chairman
4 March 2008
Chief Executive Officer's Review
Summary of the year 2007
2007 was a transformational year for STM Group plc. On 28 March 2007, the
Company was admitted to the London Stock Exchange's AIM market (AIM:STM),
raising £7.5 million through a placing of 15.0 million shares and, on the same
day, acquiring Fidecs Group (renamed 'STM Fidecs').
The Group then set about its stated objective of growing both organically and
via acquisition. In June, STM acquired Gibraltar based Atlas Group and, in
August, acquired Parliament Corporate Services also based in Gibraltar. Both of
these businesses and all the staff have been successfully integrated into STM
Fidecs. In December, STM made its first acquisition outside Gibraltar, buying
Compagnie Fiduciaire Trustees, a fully licensed trust company in Jersey.
We are delighted to report that each of the Group's businesses, following
acquisition has achieved strong organic growth. We have a clear understanding
of our clients' needs and we devote considerable effort to improving processes
and developing products to meet them. Although, the statutory consolidated
accounts for STM only include nine months trading since its first acquisition
(STM Fidecs) at the end of March, the 2007 unaudited annual turnover of STM
Fidecs alone (excluding the effect of Atlas and Parliament) increased by more
than 22 per cent. to £6.1 million compared to 2006.
Our corporate structure is designed to allow the management of each of our
operating divisions a high degree of autonomy, but within a single group-wide
code of governance and a high level of client service, common to all divisions.
We share best practice and experience throughout the Group, but avoid
duplication of overheads by sharing such matters as treasury, risk management
and, I.T. systems. Our Group management agrees clear objectives with each
divisional board and they are then left to get on with their business, reporting
on a monthly basis.
Strategy
STM's purpose is to provide innovative and unbiased financial solutions to High
Net Worth Individuals ('HNWI'), who are investing or moving cross-border or
opening a business overseas, explained in a language they understand. Once our
client is happy with the solution proposed, we implement our advice. Our
strategy is designed to achieve this mission.
With the European Union now comprising 27 member states, in which European
Citizens have the right of establishment and freedom to purchase real estate and
other assets, there is a rapidly expanding market for our cross-border advisory
services and financial products. Gibraltar is part of the UK Member State for
EU purposes (unlike the Channel Islands and the Isle of Man) which means that
STM's Gibraltar subsidiaries benefit from the fundamental freedom to provide
financial products and services directly to 456 million EU citizens. There are
also increasing numbers of EU citizens moving to work or retire outside Europe
in such areas as the Middle East (esp. Dubai), Thailand, Malaysia, Australia and
New Zealand.
STM looks to develop a long-term professional relationship with our clients,
based on mutual trust, which results in repeat business and referrals from
satisfied clients. It is estimated that 19% of children of HNWIs now live in a
different jurisdiction from their parents, so expertise in planning for
cross-border wealth transfer is required.
The sophistication and international involvement of our HNWI clients is growing
day-by-day and our products, services and processes have to keep pace. For this
reason STM will continue its 'buy and build' strategy, acquiring CTSPs in
complementary jurisdictions, to achieve global spread. We will also develop new
financial products and services to satisfy market demand.
Operational Results
The operational highlights in 2007 for each of the main divisions follows. For
the purposes of reporting the Group's progress during 2007, the principal
trading divisions were Corporate and Trustee Services ('CTS') and Insurance
Management, as well a number of other smaller, but growing divisions offering
complementary services. Pro-forma turnover and other figures stated are for the
full 12 months, so that like-for-like comparisons can be made.
Corporate and Trustee Services ('CTS')
During the twelve months to December 2007, pro-forma like for like turnover of
STM Fidecs CTS division increased by 8% to £2.734 million, compared to 2006.
Due to the fact that our CTS fees comprise a fixed annual fee per entity plus
time charges for ongoing administration and are not based on the value of assets
under management, we have not been unduly affected by the instability recently
experienced in the wider financial markets in the latter part of 2007.
The total number of entities administered by STM Fidecs appears to have remained
virtually static between the date of acquisition and the year end. In fact we
gained 31 trusts and 48 companies, which replace the 13 trusts and 50 companies,
which ceased operations during 2007. These figures show an annual attrition
rate slightly less than the generally accepted industry average of 10%.
The two bolt-on Gibraltar acquisitions, Atlas and Parliament, added a further
£0.2 million and £0.5 million of fee income respectively, since the date of
their acquisition, bringing with them a combined total of 145 trusts and 335
companies.
The number of entities on acquisition and at 31 December 2007 were:
Date of Business Trusts on Companies on Trusts at Companies at
acquisition acquired acquisition acquisition 31/12/07 31/12/07
March STM Fidecs 375 550 393 548
June Atlas 30 60 30 65
August Parliament 115 275 112 272
December Comp. Fid. 23 0 23 0
Total 543 885 558 885
The above analysis shows how successfully Atlas and Parliament have been
integrated, resulting in almost 100% client retention. In the same vein, STM
Fidecs' core business has continued to grow organically, despite the extra
demands placed on its management.
Since the year-end, STM has also purchased a portfolio of 284 Gibraltar
companies from Jordans (Gibraltar).
Insurance Management ('STM FIM')
STM FIM had a frustrating 2007, with a number of new licence applications which
were expected to be completed in 2007 being deferred into 2008. This, coupled
with a lower than expected level of premium income of several of the managed
insurance companies due to the soft conditions in the insurance market
generally, (which is cyclical), resulted in pro-forma annual income for 2007
dropping to £1.53 million from £1.7 million in 2006. However, there was a
notable increase in activity towards the end of the year and STM FIM is
currently managing three licence applications, the benefit of which will be felt
in 2008.
Working closely with other divisions within STM, considerable resource was
invested during the year in the development and the application for a licence
for STM's own life assurance company, STM Life Assurance PCC Plc ('STM Life').
All STM FIM's development costs on this project have been expensed during 2007.
Other Divisions
Tax and Financial Advisory
STM operates a number of other complementary divisions, the largest of which is
Tax and Financial Advisory. The requirement for international tax and financial
advisory services was buoyant throughout 2007, with pro-forma annual income
increasing to £0.6 million from £0.3 million the previous year. Advice given by
the division resulted in the establishment of over twenty new entities to be
administered by the corporate and trustee services division. The division has
built and is cultivating a broad base of professional intermediaries, reducing
STM's dependence on any particular network. As with STM FIM, our tax planners
also invested a considerable amount of time in researching and developing STM
Life, where again all development time costs were expensed in 2007.
STM Nummos
The re-establishment of STM Nummos, the Group's Spanish subsidiary was completed
during 2007 following the acquisition of the balance of the outstanding shares
in the previous year. STM Nummos' business is the provision of legal, including
conveyancing, tax planning, tax and accounting compliance services to
expatriates. Fee income for STM Nummos almost doubled to £0.4 million in 2007.
In 2007 we incorporated a new subsidiary and made the necessary applications for
an insurance intermediary licence to provide medical insurance throughout Spain
representing BUPA and Sanitas. The strategy behind this move is that it should
lead to considerably increased 'footfall' of HNWI expatriates to STM's offices
to whom we will cross-sell the full range of STM Group services.
Pensions
This division was launched during 2007 and has immediately established a
reputation as the specialist pension advisers and administrators in Gibraltar.
Introductions are beginning to flow from the banks and other financial
intermediaries in Gibraltar and the division is currently setting up a sizeable
self-administered pension scheme for one of the major online gambling companies.
Demand for Qualifying Recognised Overseas Pension Schemes (QROPS), which are
eligible for tax-free transfers from the UK, has exceeded expectations and time
spent in developing this service in 2007 will bear fruit in 2008.
Financial Review
The Group's statutory accounts only take into account the post acquisition
trading (effectively from the date of admission to trading on AIM onwards,
amounting to nine months trading).
Trading in STM commenced on 28 March 2007 with the acquisition of STM Fidecs.
During the period to 31 December 2007, the Group recorded turnover of £5.29
million and a profit after tax of £1.65 million. Turnover was slightly ahead of
our expectations, primarily due to approximately £0.3 million of shared office
establishment costs, recharged to previously associated businesses, which if
extracted, would result in a 33 per cent. net profit margin, in line with our
expectations. STM's taxation charge for the year was on budget at £0.14
million. Basic EPS for the period was 5.29 pence.
In line with all CTSP businesses, the Group had accrued income, in the form of
work performed for clients but not yet billed at the balance sheet date, of
£1.56 million (up from £1.2 million at 30 June 2007). This provides some
immediate visibility of billable fees for 2008, a good proportion of which have
already been billed in the first two months of the current year.
Trade receivables at the year end of £1.99 million was up from the interim stage
(30 June 2007: £1.65 million) due to increased billing from organic growth and
the effect of second half acquisitions. Since the year end, cash of
approximately £1.2 million has been collected.
The Group ended the year with cash of £0.97 million, having spent approximately
£7.4 million of cash on acquisitions between 28 March and 31 December. Deferred
cash consideration relating to acquisitions made in 2007 of approximately £0.72
million is expected to be paid out of operating cash flow in 2008.
Year on year comparators
As stated above, we believe that it is in the best interests of Shareholders to
also include, and comment upon, the trading results for the full year to 31
December 2007 in respect of STM's largest acquisition to date, that of STM
Fidecs, albeit based upon annual unaudited numbers which will not, in their
entirety, form part of the Group's statutory accounts for the current financial
period. This, will demonstrate the year on year organic growth of STM's
businesses in spite of STM's own relatively short history.
Accordingly, STM Fidecs' turnover in the full year to 31 December 2007, on a
like-for-like basis stripping out the effect of subsequent acquisitions, was
£6.09 million compared to £4.97 million in 2006, an increase of more than 22%.
Inclusive of the subsequent acquisitions (principally Atlas and Parliament), STM
Fidecs' annual turnover in 2007 was £6.83 million, an increase of more than 37%
on the previous year. Annual operating profit margin in 2007 grew to 35.3%, up
from 32.6% in 2006.
The results from the period under review show the Company to be in good health
and trading comfortably in line with our expectations.
In line with the statement made at the time our IPO, no dividend has been
declared in respect of the period ended 31 December 2007.
Our people
STM is a people business and its strength is in the quality of its management
and staff. We seek to attract, retain and develop the very best people. We
have attractive incentive and reward schemes, which encourage both personal
performance and contribution to team success.
As we are in a 'knowledge business', our staff are encouraged to pursue
continuous professional education to maintain their technical capability and
unlock their potential.
Today the team numbers over ninety people. I would like to thank each one of
them for the contribution they have made, to the success of STM Group in 2007.
Current Trading and outlook
Trading in 2008 has started well and is in line with market expectations.
In addition to the continued global growth in the number of HNWI and the
increased migration of HNWI, we will also undoubtedly benefit from the UK
Government's recent changes to taxation of non domiciled residents. This has
given rise to numerous enquiries from UK intermediaries concerning how to
restructure their clients' overseas assets or where their clients should
relocate to. We have solutions for them and this should result in considerable
new business for STM Group during 2008.
The CTSP sector remains buoyant, with significant opportunities for
consolidation activity, providing confidence in our stated 'buy and build'
strategy is being executed at an opportune time. The Company will continue to
focus on both accelerating organic growth and seeking out high quality earnings
enhancing acquisitions in both existing and complementary jurisdictions. We
remain confident of our prospects for the future.
Timothy Revill
Chief Executive Officer
4 March 2008
CONSOLIDATED INCOME STATEMENT
for the period from 1 February 2007 to 31 December 2007
Unaudited *Unaudited
Notes 1 February 2007 to Proforma year to
31 December 31 December
2007 2007
£'000 £'000
Revenue 5,292 6,833
Administrative expenses (3,520) (4,422)
Operating Profit 1,772 2,411
Share of profit of associate 12 25
Profit on ordinary activities before 1,784 2,436
taxation
Taxation 5 (137) (135)
Profit on ordinary activities after 1,647 2,301
taxation
Dividends - -
Retained profit for the period 1,647 2,301
Earnings per share basic (pence) 4 5.3 6.4
Earnings per share diluted (pence) 4 5.2 6.3
*For reference purposes only before Plc costs
The Directors consider the activities of the Group to be derived from continuing
activities.
There were no gains or losses for any period other than those recognised in the
income statement.
CONSOLIDATED BALANCE SHEET
as at 31 December 2007
Unaudited
Notes 31 December
2007
£'000
ASSETS
Non-current assets
Property, plant and equipment 7 503
Intangible assets 6 15,184
Investments 8 74
Total non-current assets 15,761
Current assets
Accrued income 1,558
Trade and other receivables 10 3,219
Cash and cash equivalents 9 971
Total current assets 5,748
Total assets 21,509
EQUITY
Called up share capital 12 38
Share premium account 15,898
Reserves 1,579
Total equity attributable to equity 17,515
shareholders
LIABILITIES
Trade and other payables 11 3,994
Total liabilities and equity 21,509
COMPANY BALANCE SHEET
as at 31 December 2007
Unaudited
Notes 31 December
2007
£'000
ASSETS
Non-current assets
Investments in subsidiaries 8 14,267
Total non-current assets 14,267
Current assets
Trade and other receivables 10 1,578
Cash and cash equivalents 9 91
Total current assets 1,669
Total assets 15,936
EQUITY
Called up share capital 12 38
Share premium account 15,898
Reserves (198)
Total equity attributable to equity 15,738
shareholders
LIABILITIES
Current liabilities
Trade and other payables 11 198
Total liabilities and equity 15,936
CONSOLIDATED CASH FLOW STATEMENT
for the period from 1 February 2007 to 31 December 2007
Unaudited
31 December 2007
£'000
Reconciliation of operating profit to net cash flow from operating activities
Profit for the period before tax 1,784
Adjustments for:-
Profit on sale of investments (9)
Depreciation 67
Share of associate profits (12)
Shares issued for services performed 22
Taxation paid (3)
Increase in trade and other receivables (2,919)
Increase in accrued income (1,558)
Increase in trade and other payables 3,860
Net cash from operating activities 1,232
Investing activities
Acquisition of investments of property, plant and equipment (570)
Acquisition of treasury shares (68)
Acquisition of investments -cash consideration (7,747)
Cash acquired as part of investments 1,182
Net cash used in investing activities (7,203)
Cash flows from financing activities
Net cash consideration from shares issued 6,942
Net cash from financing activities 6,942
Increase in cash balances 971
Analysis of cash and cash equivalents during the period
Balance at start of period -
Increase in cash and cash equivalents 971
Balance at end of period 971
CONSOLIDATED CHANGES IN EQUITY
for the period from 1 February 2007 to 31 December 2007
Share Share Profit & Loss Treasury Unaudited
Capital Premium Reserve Shares Total
£000 £000 £000 £000
At 1 February 2007 6 294 - - 300
Profit for the period - - 1,647 - 1,647
Shares Issued 32 15,604 - - 15,636
Treasury shares purchased - - - (68) (68)
At 31 December 2007 38 15,898 1,647 (68) 17,515
NOTES TO THE CONSOLIDATED PRELIMINARY RESULTS
for the period from 1 February 2007 to 31 December 2007
1. Reporting entity
STM Group Plc (the 'Company') is a company domiciled in the Isle of Man. The
address of the Company's registered office is PO Box 227, Clinch's House, Lord
Street, Douglas, IM99 1RZ.
2. Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in note 3.
Results for the period from 1 February 2007 to 31 December 2007 have not been
audited.
a) Statement of compliance
The Consolidated Financial Statements have been prepared in accordance with
International Financial Reporting Standards ('IFRSs').
b) Functional and presentation currency
These Consolidated Financial Statements are presented in Pounds Sterling (£)
which is the Company's functional currency.
c) Use of estimates and judgments
The preparation of financial statements requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all
periods presented in these Consolidated Financial Statements.
a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the
Group has the power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities. In assessing control, potential
voting rights that presently are exercisable are taken into account. The
financial statements of subsidiaries are included in the Consolidated Financial
Statements from the date that control commences until the date that control
ceases.
(ii) Associates (equity accounted investees)
Associates are those entities in which the Group has significant influence, but
not control, over the financial and operating policies. Associates are
accounted for using the equity method (equity accounted investees). The
consolidated financial statements include the Group's share of the income and
expenses of equity accounted investees, after adjustments to align the
accounting policies with those of the Group, from the date that significant
influence or control commences until the date that significant influence or
control ceases. When the Group's share of losses exceeds its interest in an
equity accounted investee the carrying amount of that interest is reduced to nil
and the recognition of further losses is discontinued except to the extent that
the Group has an obligation or has made payments on behalf of the investee.
(iii) Transactions eliminated on consolidation
Intra-group balances, and any unrealised income and expenses arising from
intra-group transactions, are eliminated in preparing the Consolidated Financial
Statements. Unrealised gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent of the Group's
interest in the investee. Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no evidence if
impairment.
b) Revenue
Revenue is derived from the provision of services and is recognised in the
income statement in proportion to the stage of completion of the transaction at
the reporting date on an accruals basis.
c) Accrued income
Accrued income represents billable time spent on the provision of services to
clients which has not been invoiced at the reporting date. Accrued income is
recorded at the staff charge-out rates in force at the reporting date, less any
specific provisions against the value of accrual income where recovery will not
be made in full.
d) Property and office equipment
(i) Recognition and measurement
Items of property and office equipment are measured at cost less accumulated
depreciation and impairment losses. Cost includes expenditures that are
directly attributable to the acquisition of the asset and bringing it into use.
(ii) Depreciation
Depreciation is recognised in the income statement on a reducing balance basis
over the estimated useful lives of each part of an item of property, plant and
equipment. Leased assets are depreciated over the shorter of the lease term or
the estimated useful life.
The rates in use on a reducing balance basis are as follows:
Office equipment - 25%
Motor vehicles - 25%
Leasehold improvements - 10%
Depreciation methods, useful lives and residual values are reassessed at the
reporting date.
e) Investments
Investments are carried at fair value, subject to provisions for impairment
where the current value of the investment is considered to be less than cost.
Impairment losses are recognised in the profit and loss account. Investments
are reviewed for impairment at each year end. Investments in associates are
accounted for on an equity accounting basis.
f) Operating leases
Payments under operating leases are charged directly to the income statement on
a straight line basis over the term of the lease.
g) Employee benefits
The Group operates a defined contribution pension plan. Obligations for
contributions to defined contribution pension plans are recognised as an expense
in the income statements when they are due.
h) Finance income and expense
Finance income comprises interest income on funds invested, dividend income and
foreign currency gains. Interest income is recognised as it accrues using the
effective interest method.
The Group also earns interest on pooled client monies, which under the client
agreements is shared by the Group and its clients. This interest income is
included in revenue.
Finance expense comprises interest in borrowings and foreign currency losses.
Interest expense is charged to the income statement using the effective interest
method.
i) Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in the income statement.
Current tax is the expected tax payable on the taxable income for the period
using enacted tax rates, adjusted for previous period adjustments.
Deferred tax is recognised using the balance sheet method, providing for
temporary differences between carrying amounts of assets and liabilities for
financial reporting purposes and for tax purposes. Deferred tax is not provided
in respect of goodwill. Deferred tax is measured at the tax rates expected to
be enacted when they reverse.
j) Foreign currency
Transactions in foreign currencies are translated to the functional currency of
the Group at exchange rates ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the reporting date
are translated at the exchange rate ruling at the reporting date. The resulting
gain or loss is recognised in the income statement.
k) Cash and cash equivalents
Cash and short term deposits in the balance sheet comprise cash at banks and in
hand and short term deposits with an original maturity of three months or less.
l) Intangible Assets - Goodwill
Goodwill arises on the acquisitions of subsidiaries and associates. Goodwill
represents the excess of the cost of the acquisition over the Group's interest
in the net fair value of the identifiable assets and liabilities of the
acquiree. Goodwill is measured at cost. An annual impairment review is
undertaken.
m) Impairment
A financial asset is considered to be impaired if objective evidence indicates
that one or more events have had a negative effect on the estimated future cash
flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount, and the present value
of the estimated future cash flows discounted at the original effective interest
rate. An impairment loss in respect of an available-for-sale financial asset is
calculated by reference to its current fair value.
Individually significant financial assets are tested for impairment on an
individual basis. The remaining financial assets are assessed collectively in
groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss. Any cumulative loss in
respect of an available-for-sale financial asset recognised previously in equity
is transferred to the income statement.
An impairment loss is reversed if the reversal can be related objectively to an
event occurring after the impairment loss was recognised. For financial assets
measured at amortised cost and available-for-sale financial assets that are debt
securities, the reversal is recognised in profit & loss. For available-for-sale
financial assets that are equity securities, the reversal is recognised directly
in equity.
The carrying amounts of the Group's non-financial assets are reviewed at each
reporting date to determine whether there is any indication of impairment. If
any such indication exists then the asset's recoverable amount is estimated. For
goodwill and intangible assets that have indefinite lives, the recoverable
amount is estimated at each reporting date.
An impairment loss is recognised if the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. A cash -generating unit is
the smallest identifiable asset group that generates cash flows that largely are
independent from other assets and groups. Impairment losses are recognised in
profit or loss. Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill allocated to
the units and then to reduce the carrying amount of the other assets in the unit
(group of units) on a pro-rata basis.
4. Earnings per Share
Earnings per share for the period from 1 February 2007 to 31 December 2007 is
based on the profit after taxation of £1,647,000 divided by the weighted average
number of £0.001 ordinary shares during the period of 31,143,626 (basic) and
31,730,450 (dilutive).
A reconciliation of the basic and diluted number of shares used in the period
ended 31 December 2007 is:
Weighted average number of shares 31,143,626
Dilutive share options and contingent consideration shares 586,824
Diluted 31,730,450
5. Tax on profit on ordinary activities
Tax is based upon the profit on ordinary activities.
The Company's main trading subsidiaries are based in Gibraltar and these
companies relinquished their tax exempt status on 28 March 2007, being the date
that they were acquired by STM Group Plc. The Corporation tax rate relating to
income derived from and accrued in Gibraltar is 35% (33% as from 1 July 2007).
6. Acquisition of subsidiaries
STM Fidecs Limited
On 28 March 2007 the STM Group Plc acquired 100% of the issued equity of Fidecs
Group Limited a company incorporated in the Isle of Man. Following acquisition
it was renamed STM Fidecs Limited. The results for the period since
acquisition are included within the consolidated results. The acquisition had
the following effect on the assets and liabilities of STM Group Plc at
acquisition.
£'000
Net identifiable assets and liabilities 1,842
Goo Goodwill 12,083
Consideration paid including costs 13,925
Atlas Trust Company Limited
On 26 June 2007 STM Fidecs Limited acquired 100% of the issued equity of Atlas
Trust Limited a company incorporated in Gibraltar. The results for the period
since acquisition are included within the consolidated results. The acquisition
had the following effect on the assets and liabilities of STM Group Plc at
acquisition.
£'000
Net identifiable assets and liabilities 85
Goodwill 580
Consideration paid including costs (including contingent consideration) 665
Parliament Corporate Services Limited
On 3 September 2007 STM Fidecs Limited acquired 100% of the issued equity of
Parliament Corporate Services Limited a company incorporated in Gibraltar. The
results for the period since acquisition are included within the consolidated
results. The acquisition had the following effect on the assets and liabilities
of STM Group Plc at acquisition.
£'000
Net identifiable assets 50
Goodwill 2,250
Consideration 2,300
Compagnie Fiduciaire Trustees Limited
On 28 December 2007 STM Fidecs Limited acquired 100% of the issued equity of
Compagnie Fiduciaire Trust Limited, a company incorporated in Jersey. The
balance sheet as at that date is included within the consolidated results. The
acquisition had the following effect on the assets and liabilities of STM Group
Plc at acquisition.
£'000
Net identifiable assets and liabilities 69
Goodwill 271
Consideration paid including costs 340
7. Property, plant and equipment
Office Motor Leasehold
Equipment Vehicles Improvements Total
£'000 £'000 £'000 £'000
Costs
As at 1 February 2007 - - - -
Acquired on acquisition at net book 172 6 296 474
value
Additions at cost 96 - - 96
As at 31 December 2007 268 6 296 570
Depreciation
As at 1 February 2007 - - - -
Change for the period 34 1 32 67
As at 31 December 2007 34 1 32 67
Net book value
As at 31 December 2007 234 5 264 503
As at 1 February 2007 - - - -
STM Group Plc holds no tangible fixed assets.
8. Investments
The fair value of investments comprises:
Group
Cost
£'000
Investments
Balance at 1 February 2007 -
Additions on acquisitions 76
Disposals (2)
Balance at 31 December 2007 74
Company
Cost
£'000
Investments in subsidiaries
Balance at 1 February 2007 -
Additions 14,267
Balance at 31 December 2007 14,267
9. Cash and cash equivalents
Cash at bank earns interest at floating rates based on prevailing rates and the
balance. The fair value of cash and cash equivalents in the Group is £971,000
and in the company is £91,000.
10. Trade and other receivables
Group
2007
£'000
Trade receivables 1,985
Disbursements recoverable 108
Other receivables 486
Other related company balances 640
3,219
Company
2007
£'000
Other receivables 199
Owed by related undertakings 1,379
1,578
Amounts owed to related undertakings are unsecured, interest free and repayable
on demand.
11. Trade and other payables
Group
2007
£'000
Loans from related parties 1,333
Deferred income 384
Trade payables 327
Corporation tax 134
Deferred and contingent consideration 904
Other creditors and accruals 912
3,994
Company:
Trade and other payables
2007
£'000
Owed to related undertakings 46
Other creditors and accruals 152
198
Loans from related parties amount to £1,333,000 and relate to a loan by Equity
Special Situations Limited, a shareholder of STM Group Plc. The loan is
repayable entirely by 31 December 2008. This loan amount is unsecured and
non-interest bearing.
12. Called up share capital
31 December
2007
£'000
Authorised
50,000,000 ordinary shares of £0.001 each 50
Called up, issued and fully paid
37,542,274 ordinary shares of £0.001 each 38
- Ends -
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